8 GoldPure is considering the following independent, average-risk investment projects: Project             Size of Project       Project IRR Project V       P1.0 million       12.0% Project W      1.2 million       11.5 Project X      1.2 million       11.0 Project Y      1.2 million       10.5 Project Z      1.0 million       10.0 The company has a target capital structure that consists of 50 percent debt and 50 percent equity. Its after-tax cost of debt is 8 percent, its cost of equity is estimated to be 16.5 percent, and its net income is P2.5 million. If the company follows a residual dividend policy, what will be its plowback ratio?   Group of answer choices 0 54% 68% 100% 32% 12% 66%

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 16P
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8

GoldPure is considering the following independent, average-risk investment projects:

Project             Size of Project       Project IRR
Project V       P1.0 million       12.0%
Project W      1.2 million       11.5
Project X      1.2 million       11.0
Project Y      1.2 million       10.5
Project Z      1.0 million       10.0

The company has a target capital structure that consists of 50 percent debt and 50 percent equity. Its after-tax cost of debt is 8 percent, its cost of equity is estimated to be 16.5 percent, and its net income is P2.5 million. If the company follows a residual dividend policy, what will be its plowback ratio?
 
Group of answer choices
0
54%
68%
100%
32%
12%
66%
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